Boom state under siege, says WA Premier Colin Barnett

WEST Australian Liberal Premier Colin Barnett has warned that his state is "under siege" from the Gillard Labor government.

WEST Australian Liberal Premier Colin Barnett has warned that his state is "under siege" from the Gillard Labor government.

Mr Barnett said he has had no meaningful policy talks with the Prime Minister since she took office.

In an exclusive interview with The Weekend Australian, Mr Barnett said his state would never accept the modified Gillard mining tax and that he would never surrender a third of Western Australia's entitled GST revenue to the commonwealth, under the terms of the federal government's national health agreement.

"What we've seen in the last year or so is that Western Australia almost feels under siege," Mr Barnett said. "I'm not one of the old school blaming Canberra for everything. But I don't think that much of the rest of Australia, including the federal bureaucracy, understands this state or what is happening here."

Mr Barnett's strongest attack concerns the Commonwealth Grants Commission's decisions on GST allocation among states, which he likens to a "Boston Tea Party" situation for the West.

At present, Western Australia is returned only 68c in every GST dollar. "This situation has become simply unacceptable to me," he said. "It is unacceptable to all Western Australians. And the public understands this. Yet projections over the next three years are that this return will fall to 54c and keep heading south. That gets almost to the scale of a Boston Tea Party revolt, not in a physical or political sense. But people here have just had enough."

Asked about the dispute over the modified mining tax, Mr Barnett said: "It has got no support here. I don't believe this deal with the big three miners will survive. It's their agreement, not ours. Canberra has got a constitutional problem. The only people who can reach agreement on royalties are state governments. Julia Gillard cannot deliver on any commitment for state royalties not to increase."

On surrendering power over royalties, Mr Barnett said: "Western Australia would never agree to such an idea."

He said any refusal by Ms Gillard to rebate miners for future increases in state royalties was "neither here nor there to me and would not affect our own decisions" on potential royalty rises.

In the week that the Prime Minister and Health Minister Nicola Roxon foreshadowed legislation to give effect to the new health agreement, Mr Barnett affirmed his refusal to sign.

He is willing to pay the price. The Premier said Western Australia would forfeit $356 million over four years or $90m a year but this was only "enough to run our health system for five days".

Attacking Canberra's motives, Mr Barnett said: "It's not really about health; it's about the GST. It's about gaining control of the GST, a growth revenue source."

Mr Barnett said he had proposed compromises on these issues but they had not been taken up by the Gillard government.

He said that while he had held talks with Ms Gillard as recently as last week, they did not constitute any "meaningful discussions".

Mr Barnett said it was time for the Commonwealth Grants Commission to be abolished. It had served the nation well but had now become obsolete. The GST was a "good reform" introduced by John Howard but in Western Australia it had gone sour.

"At the moment the people of Western Australia have no confidence in the grants commission process," Mr Barnett said.

His comments revealed the extent of policy conflict between Western Australia and federal Labor. The Barnett stand threatens Ms Gillard's mining tax deal, exposes Labor's failure in federal-state tax arrangements and casts a shadow over Labor's ability to manage effectively the resources boom, an event central to its economic credibility.